The presence of foreign buyers in Quebec’s real estate market is putting “marginal upward pressure” on prices, according to new data from the province’s Finance Ministry that sheds some light on the impact of non-Canadian property purchases on Quebec’s housing market.
From 2016 to 2017, the average price of single family homes in Quebec rose by 6.4 percent, while the average price of co-ownership properties rose by 3.2 percent.
But unlike Ontario and British Columbia, foreign buyers represent a very limited presence in Quebec. The vast number of property purchases in Quebec — 96.7 percent, in fact — involved residents of the province, while foreign buyers only accounted for one percent of all transactions, or 1307 purchases. The remaining 2.2 percent of purchases involves residents from other provinces.
The data shows that while foreign buyers have indeed put pressure on housing prices — mostly because they tend to buy more expensive homes — the number of foreigners purchasing homes has barely gone up since 2006. That year, foreign buyers accounted for 0.8 percent or 1034 of all property transactions in the province.
What is different in 2017 versus a decade ago is what kind of foreign buyers are buying up Quebec property. The main foreign buyer groups — Americans, French and Chinese — haven’t really changed from a decade ago. But while the share of American transactions in Quebec real estate slid from 49.1 percent in 2006 to 32.4 percent in 2017, the share of Chinese transactions soared from 1.3 percent in 2006 to 16.1 percent in 2017. The number of French buyers of Quebec real estate remained roughly the same in terms of percentage: 19 percent in 2006 versus 18.4 percent in 2017.
In the city of Montreal, foreign buyers accounted for 1.4 percent of all real estate transactions in 2017, compared to 3.2 percent in Toronto and 3.5 percent in Vancouver. There is a hefty tax on foreign buyers of property in both Toronto and Vancouver — 15 percent in the former and 20 percent in the latter, leading experts to predict that foreign buyers would start flooding Montreal to avoid the tax penalty of purchasing Canadian property.
That did happen to some extent, although the numbers remain small. Between January and June 2017, there was a 30 percent spike in the number of foreign buyers of Montreal property according to the Canada Mortgage and Housing Corporation (CMHC).
“The presence of Québec foreign buyers in the real estate market generally trends apace with the economic cycle,” read a section from the province’s 2018 Budget. “The moderate increase in housing prices reflects the good economic situation of Québec households.”